Home Warranties….Pros and Cons

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WHAT IS A HOME WARRANTY?

A warranty is a contract between a homeowner and a home warranty company that provides for discounted repair and replacement service on the home’s major components (furnace, AC, plumbing and electrical).  It may also cover major appliances (refrigerators/washer/dryers /swimming pools.)  A homeowner can also purchase other coverage for an additional cost.  In the event that something breaks down, the homeowner calls the home warranty company who sends a service provider to the home to look at the problem.  He completes the work if he determines it is covered by the warranty.  The homeowner pays only a small service fee.

WHAT IS THE COST OF A WARRANTY?

A warranty that lasts for one year  costs roughly $350-500, paid in advance.   Any additional coverage chosen by the buyer is extra.

WHAT ARE THE ADVANTAGES?

While a home warranty is not essential when purchasing a home, it does have its advantages and can come in handy when things break down.  If it’s a serious problem, a home warranty will offer  decent savings, if the item is covered in the warranty.  For the first year, a warranty is nice to have as you’re becoming acquainted with the various appliances and components within the home.  In the second year, you can decide if you wish to renew the warranty, but rates will increase.

For a homeowner who doesn’t have an emergency fund or who wants to protect that emergency money, a home warranty is a good thing to purchase.  A warranty offers peace of mind much like an insurance policy.  And for those who aren’t handy in making their own home repairs, warranties make sense.  For someone purchasing a pre-owned home, it provides reassurance to the new homebuyer, at least for the first year, as he becomes more familiar with the various components and appliances.

WHAT ABOUT THE DISADVANTAGES?

Having a home warranty does not mean the homeowner will never have to spend any money on home repairs.  The truth is, some problems aren’t covered by a home warranty either  because the warranty company doesn’t offer coverage for that item, or because the homeowner couldn’t foresee the future  and didn’t purchase coverage for that item. In addition, warranties often don’t cover components that haven’t been properly maintained by the previous owner. If you have new appliances in the home, you might want to pass on the home warranty because the coverage will dever to your manufacturers’ warranties.

WHICH HOME WARRANTY COMPANY SHOULD I CHOOSE?

If you’re chosing your own company, rather than assuming a home warranty that goes with the home, there are several dependable, reliable companies that service Arizona residents.  Among those that we have used are the following:

1.  Fidelity National Warranty

2.  Old Republic

3.  American Home Shield

WEIGHING THE PROS AND CONS

If you’re looking for peace of mind, buying a home warranty will offer you that, especially if the home is older.  It is not the perfect solution to all of life’s problems, and there is no guarantee that it will pay off.  Many times sellers will offer a free home warranty to the buyer and that would definitely be a gift to take advantage of.

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